The Issue Whether Petitioner's application for licensure as a temporary limited surety/bail bond agent pursuant to Sections and 648.355, Florida Statutes, should be granted.
Findings Of Fact Based upon observation of the witnesses and their demeanor while testifying; documentary materials received into evidence; stipulations by the parties; evidentiary ruling made pursuant to Section 120.57, Florida Statutes; and the record evidence submitted, the following relevant and material facts are determined: Pursuant to Chapter 648, Florida Statutes, Respondent has jurisdiction over bail bond licensure, appointments, and related activities. Petitioner appeared before the undersigned in this proceeding, identified himself and admitted that he is the individual prosecuted in the Thirteenth Judicial Circuit, in and for, Hillsborough County, Florida, Case No. 88-CF-15373, State of Florida v. Bennie Small, Jr., on a Direct Information of two counts of grand theft, and that Respondent has jurisdiction over him and the subject matter involved in its denial letter. The record evidence demonstrated that on or about January 21, 1987, Petitioner entered into a real estate contract with Deltricia Wiggins, a prospective homebuyer. Ms. Wiggins, believing Petitioner to be the realtor representing the seller, gave Petitioner $500.00 to assist her in the purchase of the home. Thereafter, she became aware that the subject home had been sold and demanded that Petitioner return her $500.00. Petitioner failed or refused to return her $500.00. Ms. Wiggins contacted the Hillsborough County State Attorney's Office and made a report. At no time during the above transaction was Petitioner a licensed real estate sales person or licensed real estate broker. The record evidence demonstrated that Petitioner entered into a real estate contract with Janet Richardson, a prospective homebuyer. Ms. Richardson, believing Petitioner to be the realtor representing the seller, gave Petitioner $500.00 to assist her in the purchase of a family home. Thereafter, she became aware that the subject home had been sold and demanded that Petitioner return her $500.00. Petitioner failed or refused to return her $500.00. At no time during the above transaction was Petitioner a licensed real estate sales person or licensed real estate broker. On October 26, 1988, the State Attorney's Office filed a Direct Information charging Petitioner with two counts of grand theft. The two counts of grand theft stemmed from Petitioner's above two unlicensed real estate transactions. At some unknown time on or before January 5, 1989, Petitioner returned the money to both Misses Wiggins and Richardson. The fact that he subsequently returned money to his two victims did not negate his taking their money under illegal and false pretense. Record evidence demonstrated that on January 17, 1989, Petitioner was represented by the Office of the Public Defender of the Thirteenth Judicial Circuit, in and for, Hillsborough County, Florida, in Case No. 88-CF-15373, and a plea of no contest to the charge of grand theft was entered on his behalf. Circuit Judge Harry Lee Coe accepted the plea of no contest on behalf of Petitioner, withheld adjudication of guilt, imposed no probation, and ordered that Petitioner not practice law nor practice real estate without appropriate licensure. Petitioner produced no record evidence that the no contest plea entered on his behalf by the public defender and that the judgment and sentence of the Court imposed by Circuit Judge Harry Lee Coe, of the Hillsborough County Circuit Court on January 17, 1989, in Case No. 88-CF-15373, has been overturned, reversed or set aside by a court of competent jurisdiction. Petitioner, through his evidence and post-hearing submittals, presented the following arguments in support of his position that "he did not enter a plea of no contest to the grand theft charge." First, Petitioner argued that while in court, "he" personally did not enter a no contest plea. Second, he argued that "his" personal approval that a no contest plea be entered on his behalf was neither requested nor given to the public defender that represented him. Third, he argued that he was not made a party at the bench conference between the presiding Judge, the prosecutor, and his public defender, when discussions regarding the terms and condition of resolving his case were ongoing and concluded. Fourth, he argued that copies of the court docket sheet, recording entries written by the court's clerk, who sat in court and made each docket sheet entry as pronounced by the court, were insufficient to establish that those recorded actions were actually taken by the court. Because of the foregone alleged irregularities, argued Petitioner, there is no "official court record" of his having entered a no contest plea to the grand theft charge. Petitioner put forth no evidence in support of his several arguments challenging Respondent's denial of his license application. Petitioner proffered no evidence of the official judicial disposition of the two counts of grand theft filed against him. Petitioner failed to produce a scintilla of evidence in support of his assertions that Respondent did not fully comply with the Florida Statutes when Respondent, by letter dated June 2, 2003, informed Petitioner that his application for licensure as a surety/bail bond agent was denied, and the denial was based on a January 17, 1989, plea of no contest to the charge of grand theft, a felony, in the Thirteenth Judicial Circuit, in and for, Hillsborough County, Florida.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order denying Petitioner's, Bennie Small, Jr., application for licensure as a temporary limited surety/bail bond agent. DONE AND ENTERED this 4th day of June, 2004, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of June, 2004.
The Issue The issue for determination in this proceeding is whether Petitioner is entitled to reimbursement for underpayment of Medicaid expenses, and, if so, the amount of such underpayment.
Findings Of Fact Some of the findings of fact relevant to this proceeding have been determined in two previous administrative proceedings, a federal district court case, and a federal bankruptcy action. The findings of fact made in the prior administrative and civil cases are discussed in the background of this proceeding. Background Petitioner is a wholly owned subsidiary of Suburban Nursing and Mobile Homes, Inc., of Ohio ("Suburban"). Suburban is a holding company which owns the stock of numerous corporations engaged in the operation of nursing homes or mobile home parks. At all times material to this proceeding, the stock of Suburban was owned or controlled by the late Gerald D. Keller and members of his family ("Keller"). Petitioner's assets include the land, buildings, and equipment used in the operation of Krestview Nursing Home ("Krestview") and Towne House Convalescent Center ("Towne House"). Krestview and Towne House are located in the greater metropolitan area of Miami, Florida. Prior to May 5, 1977, Krestview and Towne House were operated by the Wilson management group ("Wilson"). Wilson fell on dire financial straits. Criminal charges were pending against Wilson, and the closure of Krestview and two other nursing homes managed by Wilson was imminent. In an effort to avoid closure of the nursing homes, Respondent contacted Keller and asked if Keller would operate the nursing homes threatened with closure until a qualified operator could be located. A primary consideration underlying Respondent's request was the high mortality rate that could be expected if large numbers of elderly patients were relocated to other nursing homes. B & K Investments, Inc. ("B & K") was a Florida corporation wholly owned by Suburban on May 5, 1977. B & K had a current registration, a federal tax number, and the qualified personnel required to operate the nursing homes. At tile request of Respondent, B & K became the licensed provider for Krestview and Towne House. The land, buildings, and equipment used to operate Krestview and Towne House were leased to B & K by Petitioner. The lease to Wilson was terminated and new lease was executed by B & K and Petitioner. B & K agreed to a net lease containing substantially the same terms as the lease to Wilson. Under the terms of the net lease, the lessee in possession was required to pay all taxes and insurance premiums on real and personal property used in the operation of Krestview and Towne House. B & K incurred expenses for legal fees in the successful defense of an action brought by a labor. The labor union brought the action to prevent B & K from taking over the operation of Krestview and Towne House unless B & K assumed the collective bargaining obligations of its predecessor. Local 1115 Joint Bd. Nursing Home v. B & K Investments, 436 F.Supp 1203 (S.D. Fla. 1977) [hereinafter, "Local 1115"]. An agreement was entered into between B & K and Respondent for the operation of the nursing homes by B & K. The agreement provided that B & K would have no liabilities for debts or obligations attributable to the prior period of operation by Wilson. B & K paid the real property taxes for 1976 and the allocable portion of real property taxes for 1977 that were owed by Wilson for the prior period of operation. Respondent refused to reimburse B & K for those expenses even though the lease required a lessee in possession to pay property taxes and even thought payment of such taxes was a practical necessity to prevent a tax sale and subsequent redemption of the tax certificate. A formal hearing was conducted by Hearing Officer Ken Ayers to determine whether B & K should be reimbursed for the payment of real property taxes for 1976 and 1977. A Recommended Order in Division of Administrative Hearings Case No. 79-720 was entered on November 27, 1979. The Order recommended that B & K should not be reimbursed for real property taxes attributable to the prior period of operation by Wilson. The findings of fact and conclusions of law in the Recommended Order were adopted by Respondent in a Final Order entered on December 13, 1979, in Department of Health and Rehabilitative Services v. B & K Investments, Inc. d/b/a Krestview Nursing Home, and G & J Investments Corp., 2 F.A.L.R. 111-A (Fla. Dept. of Health and Rehabilitative Servs.) [hereinafter, "HRS v. B & K"]. B & K operated Krestview and Towne House from May 5, 1977, through August 31, 1977, while it was related by stock ownership to Petitioner. Medicaid rules prohibited the payment of rent by a provider to a landlord that was a related-party. B & K and Petitioner were related sibling corporations. The stock of the two corporations was owned by a common parent. Respondent disallowed the reimbursement of expenses for rent paid to a related party, and & K requested a formal hearing. The issue was resolved in the same formal hearing that was conducted to resolve the issue of whether B & K should be reimbursed for payment of real property taxes owed by Wilson. In HRS v. B & K, it was determined that. B & K should not be reimbursed for expenses incurred for rental payments to a related party. All of the stock of B & K was sold to an unrelated party to eliminate any conflict with Medicaid rules. The B & K stock was sold to Crestwood Care Centers of Florida, Inc. ("Crestwood") in an arms-length transaction completed on August 31, 1977. Respondent executed a conditional provider agreement for the operation of Krestview on November 14, 1977. An unconditional provider agreement for the operation of Krestview was executed by Respondent on December 19, 1978. 4/ The provider agreements authorized the operation of the two facilities pursuant to a Medicaid plan developed by the state and approved by the federal government (the "Medicaid plan"). Respondent amended its Medicaid plan on October 1, 1977. The amended plan adopted a "prospective" method of reimbursement and repealed the "retrospective" method of reimbursement previously applied by Respondent. /5 The provider agreements executed by Respondent after it amended its Medicaid plan specifically authorized the retroactive method of reimbursement. /6 The relationship between B & K and Respondent became increasingly strained. A medicaid audit evaluation and review analyst for Respondent speculated that, ". . . the Ohio group would get out of the business in Florida.' Respondent had complete control of B & K's sole source of cash flow for the operation of Krestview and Towne House. 7/ Respondent substantially affected B & K's cash flow by setting reimbursement rates inconsistently during 1978 and 1979, and by withholding Medicaid reimbursement payments of approximately $700,000 between July 1, 1979, and August 31, 1979. B & K sought protection in bankruptcy court in an emergency proceeding precipitated by Respondent. B & K filed a petition in bankruptcy on August 3, 1979. The primary asset of B & K was the money allegedly due from Respondent for unreimbursed Medicaid expenses. The bankruptcy trustee determined that cost reports required by Respondent for reimbursement of such expenses should be submitted if they could be prepared. For numerous reasons, the cost reports required considerable time and effort to prepare. They were eventually filed on February 7, 1983, for review and audit by Respondent. Respondent returned the cost reports submitted by Petitioner for the reasons stated in Respondent's letter dated March 25, 1983. First, Respondent alleged that the cost reports were filed after the end of the fiscal year of B & K. Second, Respondent claimed that the cost reports could only be used to set a new rate for the month following the filing of the cost report. Third, a retroactive payment allegedly could not be made to a facility with costs exceeding annual payments. Finally, the cost reports allegedly had been subject to a final audit by Respondent and the provider or bankruptcy trustee failed to timely file its request for hearing after the final audits were issued. The bankruptcy trustee desired to close the bankruptcy proceeding and assigned its interest in the claim for unpaid Medicaid reimbursements to Petitioner. Petitioner requested a formal hearing to contest Respondent's refusal to review and audit the cost reports. A formal hearing was conducted by Hearing Officer Sharyn L. Smith on October 14, 1983, to determine whether Respondent should accept the cost reports for review and audit. The Recommended Order in Division of Administrative Hearings Case No. 83-1769 entered on February 6, 1984, recommended that Respondent should accept the cost reports for review and audit. The findings of fact and overall recommendation of the Hearing Officer were adopted by Respondent in the Final Order in G & J Invs. Corp. v. Department of Health & Rehabilitative Servs., 6 F.A.L.R. 3788 (Fla. Dept. of Health & Rehabilitative Servs.), appeal dismissed, No. BA-57 (Fla. 1st DCA Nov. 5, 1984) [hereinafter "G & J v. HRS"]. The Final Order stated that all other conclusions of law were rejected. The parties in G & J v. HRS and in this proceeding are identical. On August 22, 1984, all of the cost reports were submitted for review and audit by Respondent in accordance with the Final Order entered in G & J v. HRS. Three cost reports were submitted for Krestview for the fiscal years ending May 31, 1978, and May 31, 1979, and for the three month period ending August 31, 1979. Two cost reports were submitted for Towne House for the fiscal year ending May 31, 1979, and for the three month period ending August 31, 1979. The cost report submitted for the fiscal year ending May 31, 1978, replaced the cost report originally submitted for the same period. Respondent reviewed and audited the cost reports for Krestview and Towne House, allowed a substantial portion of the claimed expenses, and made various adjustments and disallowances with regard to the remaining expenses (the "audit adjustments"). The reasons for the audit adjustments and the amount of the audit adjustments are set forth in the final audit reports prepared by Respondent. Audit reports for Krestview for the fiscal years ending May 31, 1978, and May 31, 1979, and for the three month period ending August 31, 1979, are referred hereinafter, respectively, as "EAR 5/31/78", "EAR 5/31/79", "EAR 8/31/79", Audit reports for Towne House for the fiscal year ending May 31, 1979, and for the three month period ending August 31, 1979, are referred to hereinafter, respectively, as "TAR 5/31/79" and "TAR 8/31/79". Amounts At Issue Respondent disallowed expenses in the aggregate amount of $1,748,636. Petitioner claims that it has been underpaid in the aggregate amount of $528,879 after deduction for certain disallowances admitted by Petitioner prior to the formal hearing and after reduction for mandatory limits imposed on Medicaid expenses by applicable law. Respondent claims that an overpayment was made to B & K in the aggregate amount of $1,125,910.10 Respondent asserts the overpayment as a setoff against Petitioner's claim for underpayment in the amount of $528,879. 5.02(a) Property Related Expenses Property related expenses comprised the largest portion of total expenses disallowed in the amount of $1,748,636. Some property related expenses were disallowed for more than one reason. 5.02(a) (1) Section 1122 Property related expenses, including rent, taxes, interest, depreciation, and insurance, were disallowed `by Respondent in the aggregate amount of $962,426. 11/ One of the reasons for disallowing all property related expenses included the alleged use of federal funds for capital expenditures in violation of Section 1122 of Public Law 92-603 (1972) (referred to hereinafter as either "Section 1122" or the "Section 1122 issue"). Section 1122 generally prohibits the use of federal funds by Medicaid providers for capital expenditures in excess of $100,000 without the prior approval of the then Department of Health, Education and Welfare ("HEW"). /12 Property related expenses in the amount of $575,925 /13 were disallowed solely on the basis of the Section 1122 issue. Property related expenses in the amount of $386,501 were disallowed for reasons in addition to the Section 1122 issue. Resolution of the Section 1122 issue in favor of Respondent, therefore, would dispose of a substantial portion of the disallowances involving property related expenses but not all of those disallowances. 5.02(a) (2) Other Disallowances Property related expenses in the amount of $386,501 were disallowed for reasons in addition to the Section 1122 issue. Respondent disallowed $202,680 for the additional reason that there was no actual payment of the individual items comprising that amount. /14 Expenses in the amount of $111,344 were disallowed as payments to a related party. /15 Respondent disallowed expenses in the amount of $42,029 because they were allegedly attributable to a "prior period". /16 The disallowance of this amount is a single entry in KAR 5/31/78. The period prior to the period covered by KAR 5/31/78 was the period of operation by Wilson. The "prior period" in EAR 5/31/78, therefore, refers to the period of operation by the previous provider. Finally, property related expenses in the amount of $30,448 were disallowed as insufficiently documented. /17 Property related expenses that were disallowed for insufficient documentation comprise only a portion of the total expenses disallowed as insufficiently documented. Expenses unrelated to property were also disallowed as insufficiently documented. 5.02(b) Expenses Unrelated To Property Disallowances in the amount of $786,210 involve expenses unrelated to property. Expenses unrelated to property were disallowed either for lack of documentation or for other reasons. 5.02(b) (1) Documentation Expenses unrelated to property were disallowed in the amount of $445,479 on the grounds that they were insufficiently documented. Respondent claims that documentation of expenses in the amount of $274,081 was insufficient with respect to the expenses, their relationship to patient are, or both. /18 Other expenses unrelated to property which were disallowed as insufficiently documented included accrued employee expenses in the amount of $99,163, /19 the allocation of expenses from the home office to the provider in Florida in the amount of /20 $25,311, and various other expenses in the aggregate amount of $46,924. When the amount of property related expenses and expenses unrelated to property are taken into account, expenses in the aggregate amount of $475,927 were disallowed for insufficient documentation. 5.02(b) (2) Other Disallowances Expenses unrelated to property were disallowed in the amount of $340,731 for reasons other than the lack of documentation. The reasons given in the audit reports for such disallowances were varied. Expenses in the amount of $51,310 were disallowed as either not accrued, accrued but not paid, or both. 21 When property related expenses and expenses unrelated to property are taken into account, expenses in the amount of $253,990 were disallowed as either not accrued, accrued but not paid, or both. / 22 Expenses in the amount of $34,456 were disallowed as attributable to the previous "owner" of Krestview and Towne House. /23 However, ownership of the physical assets required to operate Krestview and Towne House, including the land, buildings, and equipment was never transferred from Petitioner. Nor was the stock of Petitioner ever transferred from its parent. The reference in the audit reports to the previous "owner" of Krestview and Towne House, therefore, is construed to mean the previous provider who used the land, buildings, and equipment owned by Petitioner to operate Krestview and Towne House, i.e., Wilson. Legal fees in the amount of $26,804 were disallowed by Respondent as not related to patient /24 Respondent claims that the legal fees were incurred by the provider in connection with a union matter in which the provider was found to be in violation of the National Labor Relations Act. Expenses disallowed in the amount of $42,079 were attributed by Respondent to adjustments to the providers return on equity. /25 Disallowances to adjust the provider's return on equity were made as a result of disallowances based on the Section 1122 issue. Respondent disallowed expenses allocated from the provider's home office in the amount of $67,575 as non-reimbursable even though such expenses were sufficiently documented. /26 Expenses claimed by Krestview in the amount of $37,994 were disallowed as related to Towne House but not otherwise allowable ("allocations between facilities") /27 Expenses in the amount of $34,607 were disallowed as already paid, covered by another program, a previously entered expense, or attributable to a prior period ("already paid or covered by another program") 23 Expenses unrelated to property were disallowed in audit reports other than KAR 5/31/78 as attributable to a "prior period." The periods preceding audit reports subsequent to EAR 5/31/78 do not necessarily include either the period prior to the transfer of operations to B & K or the period prior to the transfer of B & K stock to an unrelated party. The meaning of the reference in the subsequent audit reports to a "prior period," therefore, is ambiguous and is an issue that Petitioner is required to prove. Expenses in the amount of $22,046 were disallowed for the purpose of making adjustments in the cost. /29 Expenses in the amount of $5,446 were disallowed as either personal or imprudent. /30 Expenses in the amount of $3,265 were disallowed as related to depreciation or improvements to /31 property. The audit reports do not state whether the property improved or the property subject to depreciation is real property or personal property. That is an issue Petitioner is required to prove. Expenses in the amount of $5,968 were disallowed as unrelated to the business of the provider. /32 Finally, expenses in the amount of $9,181 were disallowed to offset other income of the provider. /33 Adjustments to expenses in the amount of $204,785 were allowed but reclassified to different cost centers. /34 Those adjustments are not at issue in this proceeding. 5.02(c) Limitation Of Amounts At Issue Petitioner claims that it has been underpaid in the net amount of $528,879. The net amount of underpayment claimed by Petitioner represents the amount of underpayment after total expenses disallowed by Respondent in the amount of $1,748,636 are reduced by the amount of disallowances admitted by Petitioner and by the amount of mandatory limits on Medicaid expenses. Petitioner's failure to address certain issues during the formal hearing further limited the issues and the amounts of the issues to be determined in this Recommended Order. 5.02(c) (1) Disallowances Admitted By Petitioner Petitioner admitted prior to and during the formal hearing that Respondent properly disallowed expenses in the aggregate amount of $304,305.34. Disallowances admitted by Petitioner are comprised of expenses disallowed for insufficient documentation in the amount of $131,168.34, and other expenses disallowed in the aggregate amount of $173,137. Other expenses in the amount of $173,137 involve both property related expenses and expenses unrelated to property. Petitioner admitted that property related expenses in the amount of $111,344 were properly disallowed as payments to a related party and that expenses in the amount of $42,029 were properly disallowed as attributable to a prior period. Petitioner admitted that expenses unrelated to property in the amount of $19,764 were properly disallowed. /35 5.02(c) (2) Mandatory Limitations On Medicaid Expenses The net amount of underpayment claimed by Petitioner was determined after reductions for mandatory limits on Medicaid expenses. The actual gross amount of underpayment claimed by Petitioner is $698,875. Petitioner admits, however, that the gross amount of underpayment should be reduced by $169,996 as a result of "ceilings" or "caps" imposed by applicable statutes and rules. The net amount of underpayment claimed by Petitioner after reduction for such mandatory limits on Medicaid expenses is $528,879. 5.02(c) (3) Pretermitted Issues The issues to be determined in this Recommended Order and the amounts of those issues are limited to issues which satisfy two conjunctive tests. First, the issues must not have been admitted prior to the formal hearing. Second, the issues must have been addressed by Petitioner during the formal hearing. Issues not addressed by Petitioner during the formal hearing need not be determined on their merits but may be determined summarily as a threshold matter ("pretermitted issues") /36 Petitioner admitted prior to the formal hearing that disallowances in the amount of $304,305.34 were proper. Disallowances in the amount of $1,444,330.66 were not admitted prior to the formal hearing and formed the basis for the underpayment claimed by Petitioner in gross and net amounts of $698,875 and $528,879. /37 Pretermitted issues involved only expenses unrelated to property disallowed in the aggregate amount of $81,405.66. The aggregate amount of pretermitted issues is comprised of the following individual amounts and disallowances: (a) $14,692 disallowed as attributable to the previous owner; /38 (b) $20,807.66 disallowed as already paid or covered by another /39 program; (c) $22,046 disallowed as adjustments to cost reports; (d) $5,446 disallowed as personal or imprudent; (e) $3,265 disallowed as depreciation and improvements; (f) $5,968 disallowed as unrelated to the business of the provider,; and (g) $9,181 disallowed as an offset against other income. 5.02(d) Expenses At Issue The issues remaining to be determined in this Recommended Order involve both property related expenses and expenses unrelated to property in the aggregate amount of $1,362,925. That amount is comprised of the following individual amounts and disallowances (the "expenses at issue"): (a) property related expenses and expenses unrelated to property disallowed in the amount of $344,758.66 as insufficiently documented; (b) expenses unrelated to property disallowed in the amount of $67,575 as improper allocations from the home office; (c) expenses unrelated to property disallowed in the amount of $37,994 as improper allocations between facilities; (d) expenses unrelated to property which were disallowed in the amount of $13,799.34 as already paid or covered by another program; /40 (e) legal fees unrelated to property disallowed in the amount of $26,804; (f) property related expenses disallowed in the amount of $575,925 solely on the basis of Section 1122; (g) expenses unrelated to property disallowed in the amount of $42,079 as adjustments to return on equity; and (h) property related expenses and expenses unrelated to property disallowed in the amount of $253,990 as either not accrued, accrued but not paid, or both. Bankruptcy B & K filed a petition in bankruptcy on August 3, 1979, in the United States District Court for the Southern District of Florida, Bankruptcy No. 79- 925-BK-JE-B (the "bankruptcy proceeding"). The bankruptcy proceeding was conducted pursuant to Chapter 7 of the Bankruptcy Code of 1978 (the "Bankruptcy Code") /41 A Discharge of Bankrupt was entered on November 15, 1979. A final decree closing the bankruptcy file was entered on August 26, 1987. 5.03(a) The Bankrupt Estate Claims against the bankrupt estate included claims filed by Respondent and Petitioner. Respondent filed proof of claim in the amount of $1,179,278.51. Petitioner filed a proof of claim for administrative expenses in the amount of $35,000, a priority claim for unpaid rent in the amount of $105,000, and a non-priority claim for unpaid rent in the amount of $292,750.65. No objection was made to any of the unsecured claims. Funds in the bankrupt estate were sufficient to pay only priority claims. The bankrupt estate included two assets. One asset consisted of the bankrupt's interest in two nursing homes that housed approximately 320 Medicaid patients i.e., Krestview and Towne House. The other asset consisted of the bankrupt's claim for monies due and owing from Respondent for the underpayment of Medicaid reimbursement payments.. All right, title, and interest of B & K in the assets of the estate passed to the bankruptcy trustee when the petition in bankruptcy was filed. The claim against Respondent for unreimbursed Medicaid expenses became the property of the estate. B & K ceased to be the real party in interest for purposes of enforcing the claim against Respondent. The bankruptcy trustee had the duty of enforcing B & K's claim against Respondent. /42 The bankrupt's interest in Krestview and Towne House was abandoned by Order of Abandonment entered by the bankruptcy court on August 31, 1979. The trustee was relieved of all further responsibilities for the custody and operation of both nursing homes. The claim for monies due from Respondent was retained as the sole asset of the bankrupt estate. The amount of that claim required approximately three years to document and determine. 5.03(b) Preparation Of Cost Reports The bankruptcy trustee determined that cost reports required by Respondent for Krestview and Towne House should be submitted if they could be prepared. The bankruptcy trustee was unable to make sense of the books and records of the bankrupt to the point where the trustee felt she could make a claim for monies due from Respondent. B & K was unable to pay its accountant to prepare the cost reports required by Respondent. The bankruptcy trustee recommended to the court that the cost reports should be prepared on a contingency fee basis by Nursing Home Consultants, Inc. ("Consultants"). Consultants is an Ohio corporation engaged in the business of providing accounting services to health care organizations and a wholly owned subsidiary of Suburban. /43 The proposal to have Consultants prepare. the cost reports on a contingent basis was accepted by the bankruptcy court. An order appointing Consultants to prepare the cost reports was entered on January 11, 1980. Faced with court action, B & K's accountant eventually relinquished his work papers in December, 1980. In the words of the bankruptcy court, ". . . this pile of books . . ." was turned over to Consultants ". . . to audit the books and file the claims and press the claims." Preparation of the cost reports required by Respondent was a long and arduous task. It required checks to be matched to invoices and patient records to be verified. The first cost report was completed by Consultants in July, 1981, forwarded to the bankruptcy trustee, and filed with Respondent. Respondent returned the cost report to Consultants because the signatory of the cost report was not a certified public accountant in Ohio. Consultants obtained the required signature and returned the cost report to Respondent. 5.03(c) Assignment To Petitioner All of the cost reports had not been completed in July, 1982. Both the bankruptcy trustee and the bankruptcy judge desired to close the bankruptcy estate and ascertain what, if any, assets were available. Petitioner offered to purchase the interest of the bankruptcy trustee in the claim of the bankrupt against Respondent for unreimbursed Medicaid expenses. Petitioner's offer was accepted by the trustee and ratified and approved by the bankruptcy court on September 24, 1982. 5.03(c)(1) Consideration Paid The consideration paid by Petitioner to acquire the interest of the bankruptcy trustee included both cash and non-cash elements. Petitioner paid $5,000 in cash and agreed not to exercise its legal right to take action in the bankruptcy proceeding to recover priority claims for unpaid rent in the amount of $105,000 and administrative expenses in the amount of $35,000. Petitioner also agreed not to exercise its legal right to take action in the bankruptcy proceeding to recover the non-priority claim for unpaid rent in the amount of $292,750.65. Petitioner's offer was approved by the bankruptcy court, and Petitioner's claims were stricken by Order On Objections To Claims entered on March 11, 1983. 5.03(c) (2) Asset Acquired The asset acquired by Petitioner is reflected in the five cost reports submitted for review and audit by Respondent. Petitioner's written offer to the bankruptcy trustee stated that: the cost reports, and figures extrapolated therefrom, reflect an `asset' of the bankrupt in the form of monies dub and owing from the State of Florida. The bankruptcy trustee filed a Motion For Rule To Show Cause on or before August 25, 1982 (the "Motion"). The Motion requested the bankruptcy court to enter an order to show cause why the offer by Petitioner should not be accepted by the bankruptcy trustee. The Motion expressly incorporated by reference the terms of Petitioner's written offer and made the written offer part of the Motion. The Motion was approved by the bankruptcy court by Order On Rule To Show Cause entered on September 24, 1982. The Order On Rule To Show Cause expressly incorporated the terms of Petitioner's written offer attached to the Motion. The Order On Rule To Show Cause, in relevant part, provides: That the offer made by [Petitioner], a copy of said offer more specifically detailed and attached to the Trustee's . . . Motion, be and the same is hereby ratified and approved. 5.03(c)(3) Respondent And The Bankruptcy Court Respondent appeared at a hearing conducted on September 23, 1982, to determine whether Petitioner's offer should be accepted. Respondent's objection to the assignment was specifically denied, and Respondent did not appeal the order approving the assignment. The transcript of the hearing reveals that Respondent urged the bankruptcy court to retain the claim for the benefit of all creditors. The bankruptcy court noted that the only asset of the bankrupt was the claim for unreimbursed Medicaid payments. In an exchange between counsel for Respondent and the court, the court said: a claim is a puff of wind until it is translated by a capable attorney into proof and argument, against a solvent Defendant, to the point where it becomes money. . The [Petitioner] has . . . an administrative claim . . . for some $35,000, and . . . a priority rent claim of $105,000. /44 [The Petitioner] is willing to cancel those two and also pay $5,000 to the estate. In other words, the estate has a $145,000 bird in the hand. You urge me to tell this trustee to let that bird fly away and attempt, perhaps for the next two years, to see if this trustee can get anything on these accounts You give me a very hard choice. /45 The hard choice presented by Respondent in that case was rejected by the bankruptcy court. 5.03(d) Continued Preparation Of Cost Reports After the first cost reports were submitted to Respondent, Respondent notified Consultants that the cost reports were not in acceptable form and that additional information would be required, including balance sheets and revenues for Crestwood. Consultants began again to gather the additional information requested by Respondent. Petitioner filed cost reports containing the additional information on February 7, 1983. Respondent declined to accept the cost reports for review and audit. An administrative proceeding was conducted to determine whether Respondent should accept the cost reports. Respondent agreed to accept the cost reports in G & J v. HRS. The cost reports claimed an underpayment in the gross amount of $745,037 and an underpayment in the net amount of $359,229, after taking into account applicable ceilings on allowable expenses. Neither the gross nor the net amounts of the claimed underpayment included the cost report for Krestview for the fiscal year ending on May 31, 1978. Petitioner prepared a revised cost report to replace the original cost report submitted by B & K on November 1, 1978. /46 Documentation Petitioner sufficiently documented expenses disallowed by Respondent in the aggregate amount of $344,758.66. Documented expenses consisted of those disallowed in the amount of $25,990.66 in KAR 5/31/78, $140,329 in KAR 5/31/79, $128,006 in KAR 8/31/79, $26,330 in TAR 5/31/79, and $24,103 in TAR /47 8/31/79. Petitioner documented the amount of the expense, its relation to patient care, and the record of payments from Respondent /48 5.04(a) Amount Of The Expense Petitioner documented the amount of the disallowed expenses with records that included either original invoices, cancelled checks, or both. The records also included supporting information such as delivery receipts and receiving reports signed by employees of Krestview and Towne House. The delivery receipts and receiving reports showed that goods and services issue in this proceeding were received. The delivery receipt also contained the number of the cancelled check used to pay for the goods or services delivered. The cancel led check was verified against paid invoices. Many invoices were not located at the time the records were reviewed by field auditors because they were misfiled or filed in accordance with an unknown filing system. The records were voluminous and filled approximately 50 boxes. The records included books of original entry, original invoices, cancelled checks, personnel records, payroll records, payroll journals, pay claim listings, and other supporting documentation from which costs of operation were determined. The records originally obtained from the bankruptcy trustee were in such a state that Consultants had to completely reconstruct the operation of Krestview and Towne House. The records were first sorted into logical groups. Then cash accounts were reconciled to each account for each reporting period covered in each cost report. Each check was listed by number, amount, identity of vendor, and category. Consultants contacted the suppliers and purveyors for each facility to review their records for the years in question. Information was also obtained from federal, state, and county agencies, including the Medicare/Medicaid intermediary. The information obtained from government agencies included: computer printouts of reimbursement checks, vendor payment checks, and patient activity records from Respondent; all invoices from the Dade County Department of Human Resources, Health Services Division; and B & K's banking records. The records and the cost reports prepared from those records were reviewed and tested by certified public accountants in accordance with generally accepted auditing standards ("GAAS"). The examination included tests of the accounting records and other auditing procedures considered necessary under the circumstances. /49 Petitioner is the custodian of the records used to document the expenses claimed in the cost reports pursuant to the order of the bankruptcy court. The records were delivered to Mrs. Ruth Eldridge at Consultants by the CPA for B & K pursuant to the order of the bankruptcy court. Mrs. Eldridge has over 30 years of experience in the health care industry and has prepared hundreds of cost reports for various nursing homes subject to Medicaid and Medicare requirements. Mrs. Eldridge was personally responsible for preparing and verifying the records and cost reports. Her testimony at the formal hearing was credible and persuasive. 5.04(b) Relation To Patient Care Disallowed expenses documented by Petitioner were related to patient care. The expenses were reasonable in amount and in line with amounts paid by other providers in the same geographic area. The goods and services purchased were of the same kind and character as that provided to other providers in the same geographic area. The population of patients in Krestview and Towne House was monitored by daily census records taken by nurses at each nursing station within each facility. The names of patients appearing on the daily census reports corresponded to names of patients appearing on the nurses daily activity reports. The expenses listed in the five cost reports correlated to the patient days listed in the record of payments from Respondent. 5.04(c) Payment Petitioner sufficiently documented the record of payments from Respondent to B & K. Respondent withheld all payments to B & K from July 1, 1979, through August 31, 1979. Respondent withheld payments in the approximate aggregate amount of $700,000. Petitioner documented the record of payment with the paid claim listing provided to Petitioner by Respondent's agent. Respondent entered into a contract with Systems Development Corporation of Tallahassee, Florida ("SDC") to process Medicaid claims and issue reimbursement checks to providers. Pursuant to that contract, SDC maintained a paid claim listing and backup documentation for reimbursement payments made to providers. The paid claim listing is a computer printout containing the names of each individual Medicaid recipient in Krestview and Towne House for the periods at issue in this proceeding. In addition to the name of each Medicaid patient, the paid claim listing shows the identification number of each patient, the months that each patient was in the facility, the date of service rendered by month, the amount of payment from other sources, including patient contributions, and the net amount remitted by Respondent. Paid claim listings were audited by Respondent each month. Petitioner was directed by Respondent to obtain the paid claim listing from SDC for the purpose of determining the record of payments made by Respondent to B & K. When Petitioner asked Respondent how to obtain information evidencing such payments, Respondent instructed Petitioner to contact SDC. Mrs. Eldridge wrote to SDC asking for a paid claim listing. SDC responded by mailing a computer printout to Mrs. Eldridge containing the paid claim listings for Krestview and Towne House. Paid claim listings were audited by Respondent to assure that rates established by Respondent were properly input by SDC into the computer system. The reimbursement rate for B & K was adjusted downward by Respondent effective June 19, 1979. While the paid claim listing shows that the rate adjustment was never implemented, it also shows that no payments were made to B & K after June 30, 1979. Allocations From The Home Office Expenses in the amount of $67,575 were properly allocated from the home office. The method of allocation was reasonable and sufficiently documented. Expenses incurred by Krestview and Towne House for services provided to each facility by the home office were allocated based upon the number of patient days for each facility. Allocating expenses based upon the number of patient days is the generally accepted method used for allocating expenses in cost reports when more than one facility is operated by the same home office and services are rendered to both facilities. Allocations Between Facilities Expenses in the amount of $37,994 were allocated between Krestview and Towne House. The method of allocating expenses between facilities was reasonable and sufficiently documented. The expenses were allocated between facilities based upon a case-by-case determination of which individual expense was actually incurred by each facility. Expenses incurred by one facility but paid by a check from the other facility were allocated to the facility that incurred the expense. All of the expenses allocated between facilities were related to patient care. Already Paid Or Covered By Another Program Expenses in the amount of $13,799.34 were proper expenses and were not already paid or paid under alternative programs. These expenses included pharmaceutical and nursing home supplies actually purchased by Krestview and Towne House. The expenses were disallowed because another program generally paid for that type of expense. The amount of expenses paid by other programs, however, was limited. The excess of the actual expense over that paid by the other program was a proper expense incurred by the facility. If the amount of prescription order by the physician, for example, exceeded the amount paid by the alternative program or if the amount of the supplies needed by the facility exceeded the maximum paid by the alternative program, then the facility had to pay the difference. The amount of the difference ended up as an actual expense of each nursing home Legal Fees Legal fees in the amount of $26,804 are allowable expenses. They are reasonable expenses incurred as a precondition for the delivery of health services. The legal fees were not incurred in violation of the National Labor Relations Act. Local 1115. The legal fees were incurred in connection with activities related to collective bargaining, contract negotiations, and procedures which flow from enforcement of the terms of a collective bargaining contract either in a collective or individual setting. The legal fees were necessary to maintain operations by the provider and were a precondition of the delivery of health services. The legal fees at issue were incurred by the provider in connection with activities related to the enforcement of the terms of a collective bargaining contract. A labor union attempted to prevent the transfer of management operations to B & K unless B & K agreed to assume the obligations of the collective bargaining agreement between the union and B & K's transferor. The labor union's attempt resulted in litigation in federal district court. Local 1115. The court specifically found that the case began as an attempt by the labor union to prevent the transfer of the management operation of Krestview and Towne House unless the transferee agreed to assume the obligations of the collective bargaining agreement between the labor union and the transferor. The court did not find that B & K was in violation of the National Labor Relations Act. Respondent improperly characterized a portion of the legal fees as organizational or start-up costs associated with the transfer of ownership to B & K. Respondent improperly required the legal fees to be capitalized and amortized rather than currently deductible. Section 1122 Property related expenses in the aggregate amount of $809,053 /50 are ordinary expenses which are properly allowable as current deductions against ordinary income. They are related to patient care and are reimbursable Medicaid expenses. Respondent's determination that the expenses at issue were capital expenditures was incorrect and was made in a procedurally deficient manner. The expenses at issue are not capital expenditures that must be capitalized and either amortized or depreciated over time. Respondent's determination that such expenses were capital expenditures failed to comply with applicable federal and state requirements for making determinations, findings, and recommendations upon which the federal government made the decision to deny reimbursement of expenses on the basis of the Section 1122 issue. 5.09(a) Unauthorized Review Of Leases Federal law enacted in 1975 required states to have either a program for granting or denying certificates of need ("CON") or a program that required prior approval for capital expenditures in excess of $100,000 in accordance with Section 1122. The certificate of need program was purely a state program. The Section 1122 program was a federal program administered by states pursuant to contract between the state and federal governments. States were authorized under the federal legislation to establish and administer both a CON program and a Section 1122 program. HEW had exclusive authority to determine. whether a capital expenditure had occurred without prior approval, whether to impose sanctions, and what sanctions to impose, if any. The HEW determination was based on findings and recommendations of the state agency administering the plan. The state agency was required to give the provider an opportunity for a fair hearing before presenting findings and recommendations to HEW. Both types of programs were established and administered in Florida by Respondent until sometime in June, 1978. The Office of Community Medical Facilities was the office responsible for administering the Section 1122 program for Respondent. In June, 1978, the contract under which Respondent administered the Section 1122 program for HEW expired. The contract under which Respondent administered the Section 1122 program expired prior to the time any action was taken by Respondent in connection with B & K and Section 1122. Respondent first requested that it be permitted to review the two leases for Krestview and Towne House pursuant to Section 1122 on March 2, 1979. Respondent's request was made to B & K approximately eight months after Respondent's contract to administer the federal program expired. Respondent's Office of Community Medical Facilities notified the president of B & K by separate letters dated March 2, 1979, that a "capital expenditure" in the form of the leases for Krestview and Towne House had "occurred." The separate letters stated that the lease agreements had not been reviewed ". . . as required by Section 1122, P.L. 92-603. Acting as the Designated Planning Agency (DPA) in the Section 1122 review program . . .," Respondent offered to ". . . review the . . . capital expenditure[s] under the Section 1122 program for conformity with standards, plans and criteria." Respondent had no contractual authority on March 2, 1979, to conduct a review of the leases for Krestview and Towne House on behalf of the federal government. Even if Respondent had authority to review the leases, that authority was limited to a review of the leases for the purpose of determining whether lease payments made from May 5, 1977, until sometime in June, 1978, constituted capital expenditures. Respondent withheld reimbursement of all Medicaid expenses after June 30, 1979, in an effort to recoup all lease payments irrespective of when they were made. 5.09(b) Previous Authorized Review Of Leases The two leases for the operation of Krestview and Towne House were net leases entered into between B & K and Petitioner on May 5, 1977. HRS v. B & K. The terms of the net leases required the lessee to pay property related expenses including taxes and insurance on real and personal property. Id. The leases contained substantially the same terms and conditions as those by which the previous provider had operated the two facilities prior to the time B & K assumed operations at the request of Respondent. Id. The two leases for Krestview and Towne House were included in a review by Respondent's Office of Community Medical Facilities in 1978, prior to the expiration of the contract to administer the Section 1122 program. The purpose of tile review was to determine if there was ". . . a purchase made of the nursing facilities. . . " and if there was ". . . any action to be taken under Section 1122, Public Law 92-603. See Joint Exhibit 27. Respondent's review focused on transactions between B & K and its parent company and the stock purchase agreement between B & K's parent and Petitioner as the transferor of the stock. The stock purchase agreement expressly incorporated the two leases between B & K and Petitioner. On April 11, 1978, Respondent's Office of Community Medical Facilities notified the president of B & K that the ". . stock transfer . . . is not reviewable . . . under Section 1122, . . . as it will have no effect on depreciation, interest or fair return on investment for reimbursement purposes." See Joint Exhibit 28. 5.09(c) No Capital Expenditure Occurred Lease payments made by B & K to Petitioner for use of the Krestview and Towne House facilities did not constitute capital expenditures within the meaning of Section 1122. The lease payments were properly chargeable as a currently deductible expense of operation and maintenance based on GAAP. Lease payments could be treated as capital expenditures if lease payments were made pursuant to a transaction which was cast in the form of a lease but which in substance was an installment sale (a "virtual purchase"). A lease could be recharacterized as a virtual purchase if the lease payments exceeded the fair rental value in the geographic area, the term of the lease was less than the useful life of the facility, and the provider had either an option to renew the lease at a significantly reduced rental rate or an option to purchase at a price significantly less than the fair market value of the facility. The terms of the two leases for Krestview and Towne House did not satisfy any one of the requirements of a virtual purchase. The lease payments individually and in the aggregate did not exceed fair rental value for the geographic area. The terms of the leases did not exceed the useful life of the facilities. The terms of the leases included neither an option to renew at a rental rate significantly less than the fair rental value nor an option to purchase at a price significantly less than the fair market value of the facilities. There is nothing in either of the two leases to suggest that the agreements were anything but a straight lease or that the payments were anything but bona fide lease payments. Respondent's determination in 1978 that the rental rate for Krestview and Towne House exceeded the fair rental value of the two facilities was dismissed by Respondent prior' to a formal hearing in 1979. HRS v. B & K at 2. A desk review by Respondent's Office of Audit Service disallowed an increase in rent on May 31, 1976, prior to the time B & K began operations of the two facilities. Respondent's field audit allowed the rental increase. Petitioner requested a formal hearing to determine ". . . `an appropriate and acceptable rental amount'. . ." Respondent's Office of Audit Service received a copy of each of the leases for the two facilities on February 19, 1979. The issue of the whether the rental rate was reasonable was dismissed prior to the formal hearing. Id. 5.09(d) Agency Determinations, Findings, And Recommendation Respondent determined the substantial interests of B & K in two separate determinations. First, Respondent made a threshold determination that a "capital expenditure" had occurred in the form of lease payments made under two leases far Krestview and Towne House. Second, Respondent determined that B & K failed to submit a proposal for review of a "capital expenditure." Both of Respondent's determinations constituted findings without an opportunity for a fair hearing in violation of state and federal law. Based upon those findings, Respondent submitted recommendations to HEW that led to the exclusion of amounts attributable to such "capital expenditures" in determining Medicaid reimbursement payments to B & K. 5.09(d) (1) Determinations Respondent's first determination of B & K's substantial interests took the form of separate "implicit" determinations made on March 2, 1979. /51 Respondent's Office of Community Medical Facilities stated in separate letters to B & K dated March 2, 1979, that correspondence had been received from Respondent's Office of Audit Service ". . . indicating that a capital expenditure . . . [had] occurred . . . ." See Joint Exhibit 20 (emphasis added). In the next paragraph, Respondent offered ". . . to review the above mentioned capital expenditure under the Section 1122 program . . . ." (emphasis added) The next paragraph advised B & K that it had only 30 days to initiate a request for review . . ." of the capital expenditure or risk the withholding of payments Respondent explicitly determined on April 10, 1979, that a "capital expenditure" had occurred in the form of lease payments for Krestview and Towne House. On April 10, 1979, Respondent's Office of Community Medical Facilities stated in a letter to counsel for Petitioner that ". . . it is the determination of [Respondent] and this office that the lease transactions were a capital expenditure and subject to review under Section 1122 of P.L. 92-603." See Joint Exhibit~22. Respondent's second determination of B & K's substantial interests took the form of separate written determinations on May 15 and 16, 1979, that B & K had failed to submit a proposal for review of a capital expenditure. On May 15 and 16, 1979, Respondent's Office of Community Medical Facilities made numerous findings in written correspondence to HEW. Respondent found, in relevant part, that B & K had undertaken action under Section 1122 involving the acquisition of two nursing homes at an aggregate cost of $8,300,000 without submitting a proposal for review of such costs. 5.09(d) (2) Findings And Recommendations Respondent's determinations that a "capital expenditure" had occurred and that B & K had not submitted a proposal for review of such "capital expenditures" constituted findings under applicable federal law. HEW notified the president of B & K on May 25, 1979, that HEW had ". . reviewed the findings and recommendations of [Respondent] with respect to the proposed capital expenditure [of $8,300,000] . . ." (emphasis added). See Respondent's Exhibit 6. Respondent recommended to the federal government that amounts attributable to "capital expenditures" be excluded in determining Medicaid reimbursement payments to B & K. On May 15 and 16, 1979, Respondent's Office of Community Medical Facilities recommended to the appropriate office of HEW that " . . . amounts attributable to this capital expenditure be excluded in determining payments to the proponent under Titles V, XVIII and XIX of the Social Security Act for services furnished." See Joint Exhibits 23 and 24, Part IV, D, of attached Record Of State And Local Action Under Section 1122 Of The Social Security Act. The letter of transmittal from Respondent to HEW represented that the correspondence contained Respondent's "recommendation." The findings and recommendations made by Respondent to HEW formed the basis for HEW's decision to withhold reimbursements for capital expenditures. On May 25, 1979, HEW notified Respondent that HEW had ". . . reviewed the bindings and recommendations of [Respondent] with respect to the proposed capital expenditure [of $8,300,000] . . . ." Based upon Respondent's findings and recommendations, HEW determined that reimbursement would be indefinitely withheld for the "capital expenditure." 5.09(e) Procedural Defects Respondent determined the substantial interests of B & K without giving B & K an opportunity for a fair hearing. Respondent's notice to B & K on March 2, 1979, did not clearly state that a determination had been made of the occurrence of a capital expenditure. That determination was only "implied" /52 Respondent did not explicitly state that a determination had been made of the occurrence of a capital expenditure until Respondent made that disclosure in its letter to counsel for Petitioner on April 10, 1979. That disclosure, however, was addressed by Respondent to counsel for Petitioner and was not addressed to B & K. Neither notice included a statement of B & K's appeal rights with respect to either Respondent's "implicit" or explicit determinations that a "capital expenditure" had occurred. 5.09(e)(1) Determinations That Capital Expenditure Had Occurred Respondent's notice to B & K on March 2, 1979, failed to disclose B & K's appeal rights concerning Respondent's "implicit" determination that a "capital expenditure" had occurred. Respondent's notice offered to ". . review the . capital expenditure . . . . [,] stated that B & K had 36 days to " . . . initiate a request for review [of the capital expenditure] in compliance with DHRS Rule 10-5 . [,]" and further stated that failure to ". . . initiate such a request for review leaves no basis for a finding of conformity and may be grounds for indefinite withholding of Medicare/Medicaid reimbursements by DHEW." The copies of administrative rules attached to the notice on March 2, 1979, addressed neither B & K's rights to appeal Respondent's implicit determination that a capital expenditure had occurred nor the procedures for such appeals. See Joint Exhibit 20. The notice to counsel for Petitioner on April 10, 1979, of Respondent's explicit determination that a "capital expenditure" had occurred contained no statement of appeal rights available to B & K. The notice merely stated that Respondent had determined that the lease payments ". . . were capital expenditures . . ." and referred counsel for Petitioner to state and federal laws relied upon by Respondent for its determination. 5.09(e) (2) Determination Of Failure To Submit Proposal For Review Of A Capital Expenditure The first written notice of Respondent's determination that B & K had failed to submit a proposal for review of a capital expenditure was given to B & K in the form of copies of Respondent's written correspondence to the federal government. That written notice was received by B & K after Respondent mailed its findings and recommendations to HEW. The notice of determination failed to inform B & K of any appeal rights concerning Respondent's determination of B & K's substantial interests. The notice of determination also made findings and recommendations relied upon by HEW without- first giving B & K an opportunity for a fair hearing. B & K was not given 30 days to request a formal hearing. The notices of March 2, 1979, were received ) by B & K on March 21, 1979. The time to submit a proposal for review of a "capital expenditure" expired on or about April 21, 1979. April 22, 1979, was the first day that Respondent could have determined that B & K had not timely filed a proposal for review of a "capital expenditure." There is no evidence in the record that Respondent made such a determination on April 22, 1979. Even if Respondent determined in free form agency action conducted on April 22, 1979, that a proposal for review of a "capital expenditure" had not been timely filed, B & K would have had 30 days under applicable federal regulations, or until May 22, 1979, to request a formal hearing concerning Respondent's determination. Respondent, however, notified the federal government on May 15 and 16, 1979, that Respondent had determined that no proposal for review of a "capital expenditure" had been timely filed. Respondent's notice to the federal government was dated approximately six to seven days prior to the last day of the 30 day period in which B & K was entitled to request a formal hearing. May 15, 1979, was the first day that the failure to timely file a proposal for review of a capital expenditure could have been determined by Respondent in any manner other than free form agency action. May 15 and 16, 1979, were the dates of Respondent's written notices to the federal government that no proposal for review of a capital expenditure had been filed. The notices of Respondent's determinations were also mailed to B & K on May IS and 16, 1979. The last days to request a formal hearing concerning Respondent's determinations were Jane 15 and 16, 1979. A formal hearing was requested by counsel for Petitioner on May 29, 1979. The request for a formal hearing from counsel for Petitioner was sufficient to put Respondent on notice that its proposed agency action was being contested. In any event, the issue of who requested the formal hearing and his or her authority to represent B & K is a moot point. The federal government instructed Respondent to withhold Medicaid reimbursements for capital expenditures before the request for formal hearing could be made. On May 21, 1979, the federal government received Respondent's notices of May 15 and 16, 1979. On May 25, 1979, HEW notified Respondent that HEW had determined that B & K failed to submit a review for proposal and that reimbursement would be indefinitely withheld for the `capital expenditure [of $8,300,000] . . . ." See Respondent's Exhibit 6. /53 Even if a point of entry had been provided to B & K, it was not a clear point of entry. The point of entry provided to B & K on March 2, 1979, was a 30 day window of time to submit an application for review of a "capital expenditure." Respondent never informed B & K of its appeal rights concerning either Respondent's threshold determination that a capital expenditure had occurred or Respondent's determination that ". . . no proposal [had been] submitted. . ." for review of a "capital expenditure." The manner in which Respondent determined B & K's substantial interests and the manner in which Respondent attempted to fulfill its due process obligations was, at best, confusing and unclear. Respondent's conduct precipitated more than one attempt by more than one law firm to ascertain what action had in fact been taken by Respondent. See Joint Exhibits 21, 25, 26. Accrual And Payment Expenses in the amount of $253,990 were either properly accrued and properly paid. A portion of those expenses were discharged in bankruptcy. The remaining portion was assigned to Petitioner for payment. 5.10(a) Accrual An invoice for each expense claimed in the cost reports was received at the time the goods or services were delivered. The provider had knowledge of the amount due for such goods or services. The obligation to pay for the goods or services was incurred in the ordinary course of business. The amount of the obligation and time for payment gas fixed and determined between the parties to each transaction. The provider either paid the obligation or intended to pay the obligation at the time the provider received the invoice. B & K, the bankruptcy trustee, and Petitioner have always intended to pay expenses disallowed as not properly accrued. Petitioner never abandoned the claim for reimbursement of expenses. Pursuant to the assignment approved by the bankruptcy court Petitioner prepared the needed cost reports and "pressed" the claim against Respondent for reimbursement of Medicaid expenses. Pursuant to the Final Order in G & J v. HRS, Petitioner submitted the cost reports required by Respondent for review and audit on August 22, 1984. More than four years later, Respondent completed its review and audit of the cost reports. Petitioner has consistently pursued the payment of expenses disallowed by Respondent. 5.10(b) Payment Expenses disallowed in the audit reports in the amount of $253,990 were properly paid within the meaning of applicable Medicaid rules. /54 Applicable Medicaid rules require payment within one year after the end of the cost reporting period in which the liability was incurred. Payment may occur up to three years after the end of the cost reporting period in which the liability was incurred if there is valid justification for the delay. Valid justification includes cash flow difficulties and accounting errors in the receipt and processing of bills. See discussion at Conclusions of Law, Sac. 6.07(d), infra. Valid justification existed for not paying expenses disallowed as unpaid within one year after the end of the cost reporting period in which the liabilities were incurred. B & K encountered cash flow difficulties when Respondent cut off the sole source of cash flow required to pay expenses disallowed by Respondent as unpaid. B & K also encountered accounting errors in the receipt and processing of bills for the cost of goods and services when Respondent adjusted the reimbursement rate to be paid to B & K to recoup expenses disallowed retroactively to May 5, 1977. The cash flow difficulties and accounting errors experienced by B & K were caused by action undertaken by Respondent without reasonable care. 55/ The lease payments from B & K to Petitioner were made pursuant to leases that here substantially the same as those under which the previous provider operated Krestview and Towne House. The leases under which B & K operated the two facilities had been included in a review conducted by Respondent the previous year. When Respondent incorrectly determined that the lease payments were capital expenditures, Respondent did so pursuant to a contract with the federal government that had previously expired. Respondent made recommendations to the federal government based upon findings that were substantively incorrect and that were procedurally deficient. Notices to B & K of action taken or to be taken by Respondent were untimely, deficient, and unclear. When Respondent explicitly stated what action it had taken, the notice of that action was not mailed to B & K. Liabilities for expenses disallowed as unpaid were incurred in the period covered by cost reports for the fiscal year ending May 31, 1979, and for the three month period ending August 31, 1979. See, KAR 8/31/79, TAR 5/31/79, and TAR 8/31/79. An automatic stay was imposed by applicable bankruptcy law when the petition in bankruptcy was filed on August 3, 1979; within one year after the end of the cost reporting period in which the liabilities were incurred. The automatic stay enjoined any action for the payment of expenses until the bankruptcy proceeding was closed. The three year period allowed for payment of expenses under applicable Medicaid rules was tolled upon the filing of the petition in bankruptcy. The three year period ran from May 31, 1979, to August 3, 1979, when the petition in bankruptcy was filed. The automatic stay enjoined further action until the bankruptcy file was closed. The bankruptcy file was closed on August 27, 1987. This proceeding began on July 9, 1987, during the pendency of the automatic stay imposed under applicable bankruptcy law. /56 The three year period allowed under applicable Medicaid rules for payment of Medicaid expenses will not begin to run again until the conclusion of this proceeding. 57/ Return On Equity Expenses unrelated to property in the amount of $42,079 were improperly disallowed by Respondent as adjustments to return on equity. The adjustments to return on equity were made as a result of the lease payments disallowed as "capital expenditures." One of the purposes of a review under Section 1122 is to determine whether a particular expenditure will have an affect on ". . . depreciation, interest or fair return on investment for reimbursement purposes." See Respondent's letter to B & K on April 11, 1978 in Joint Exhibit 28. Retroactive And Prospective Methods Of Reimbursement Two methods of reimbursement for Medicaid expenses were used by Respondent from May 5, 1977, through August 31, 1979. The retrospective method of reimbursement was issued prior to October 1, 1977. The prospective system was used effective October 1, 1977. Application for approval of the change in methods of reimbursement was submitted by Respondent to the appropriate office of HEW on December 12, 1977, received by HEW on December 15, 1977, and approved by HEW on April 26, 1978. The effective date of the change was October 1, 1977. The adoption of the prospective method of reimbursement was merely a continuation of the previously existing Medicaid program with no new or additional economic impact to the state, private persons, or others. G & J v. HRS at 10. 5.12(a) Final Rate And Rate Application Period Both methods of reimbursement are used to establish a per diem rate of reimbursement ("final rate"). The final rate is determined under both methods of reimbursement for a particular provider by dividing allowable costs by allowable Medicaid patient days. 58/ Allowable costs are those costs reported by providers on annual cost reports submitted to Respondent after upward or downward adjustments, if any, are made by Respondent and agreed to by the provider. The final rate established under the retrospective method of reimbursement is applied backward over the period covered by the cost report. The final rate is also used as the interim rate to be paid until the next cost report is filed by the provider. The final rate established under the prospective method of reimbursement is applied forward during the period covered by the next cost report to be filed. The final rate includes an inflation factor to compensate the provider for the fact that the final rate is calculated prior to the rate application period. 5.12(b) Settlement Of Overpayment And Underpayment An overpayment occurs when the actual annual payments received by a provider exceed the actual annual allowable costs included in the cost report filed by the provider. An underpayment occurs when the actual annual allowable costs included in the cost report filed by the provider exceed the actual annual payments received by the provider during the period covered by the cost report. An overpayment and an underpayment are generally settled in the same process in which final rates and interim rates are determined. The customary method of settling an overpayment and an underpayment assumes that the provider is an ongoing business. The customary method of settlement does not address a provider who terminates its operations as a result of bankruptcy or otherwise. 5.12(b) (1) Overpayment The customary method of settling an overpayment is different under the retrospective and prospective methods of reimbursement. Under the retrospective method of reimbursement, an overpayment is recovered by Respondent either by a mutually acceptable plan negotiated between Respondent and the provider or by withholding regular payments to the provider. Recovery by withholding of payments, however, can be used only after the provider is offered an opportunity for a fair hearing and, if requested, a fair hearing is completed and a final decision is entered. Under the prospective method of reimbursement, an overpayment is not recovered retrospectively. Instead, the amount of overpayment is excluded from the allowable costs used in calculating the final rate to be applied subsequently during the rate application period. The exclusion of an from allowable costs has the effect of reducing the final rate subsequently received by the provider during the rate application period. 5.12(b) (2) Underpayment An underpayment is treated similarly under the retrospective and prospective methods of reimbursement. When a provider's actual annual allowable costs included in the cost report filed under the retrospective method of reimbursement exceed the actual annual payment from Respondent, the interim rate paid until the next cost report is filed is increased by an allowance of nine percent in lieu of retroactive payments. When a provider's actual annual allowable costs included in the cost report filed under the prospective method of reimbursement exceed the actual annual payment from Respondent, the final rate to be applied during the next rate application period is increased in proportion to the actual annual allowable costs included in the cost report. 5.12(c) Reimbursement For Underpayment Petitioner is entitled to reimbursement of an underpayment under either the retrospective or prospective methods of reimbursement. Some of the findings of fact that are relevant to this factual issue were made in the Recommended Order in G & J v. HRS. The findings of fact in the Recommended Order were adopted in Respondent's final order. Other findings of fact that are relevant to this factual issue are made in this proceeding. 5.12(c) (1) Prior Proceeding The Recommended Order in G & J v. HRS found that underpayment could be recovered by a provider upon receipt of a properly completed claims document. The Recommended Order found that a claims document included a cost report. The Recommended Order in G & J v. HRS rejected Respondent's assertion that cost reports can only be used to set a new rate and cannot be used to establish the amount of retroactive payments. The Recommended Order found that the purpose of the cost reports was not limited to the establishment of a new rate. Respondent was aware that Petitioner was preparing cost reports for audit and that B & K was out of business. The establishment of a new rate for an ongoing business is not the only purpose for filing cost reports. Cost reports may also be filed to obtain retroactive payments if such payments are not otherwise prohibited. G & J v. HRS. Florida Administrative Code Rule 10C-7.48(6) (i) does not prevent retroactive reimbursement for an underpayment. The Recommended Order based its determination upon four findings of fact. Most importantly, the Recommended Order found that retroactive reimbursement for an underpayment was specifically contemplated in the provider agreement entered into between B & K and Respondent. 60/ Any rights to such reimbursement were assigned to Petitioner by the bankruptcy trustee pursuant to the order of the bankruptcy court. Second, Retroactive reimbursement of underpayment was contemplated in Respondent's "Instructions to Cost Reports for Nursing Homes Participating in the Florida Medicaid Program." Florida Administrative Code Rule 10C-7.48 provides that cost reports are to be completed in accordance with Respondent's instructions. Third, retroactive reimbursement of an underpayment was not eliminated by the adoption of a "totally new prospective system of payment." The adoption of the prospective system of payment was merely a continuation of the Medicaid program with no new or additional economic impact to the state, private persons, or others. Fourth, Florida Administrative Code Rule 10C-7.48(6) (i) does not prohibit all retroactive payments bat rather only retroactive reimbursement of those costs which exceed annual payment." A definition of "annual payment" could not be established by Respondent. B & K never experienced an established and consistently applied rate during 1978 and 1979. Instead, B & K experienced a series of eight different crates in less than 12 months. The policy of Respondent was that rates became effective on the first day of each month after a cost report was filed. The Respondent's policy, however, was inapplicable because rates for B & K were not set with any consistent pattern or principle in mind. 5.12(c) (2) This Proceeding Both the retrospective and prospective methods of reimbursement authorize the recovery of an underpayment by a provider under two sets of circumstances. First, underpayment can be recovered by the provider if an audit determines that there were errors on the cost reports and actual costs were greater than reported costs. Second, the provider agreement expressly states that "[i]n instances of nonpayment or under- payment . . . the [Respondent] shall make payment to the Provider upon receipt of properly completed claims documents." (emphasis added) Both sets of circumstances required to recover an underpayment are satisfied in this proceeding. First, actual costs incurred by B & K exceeded reported costs as adjusted by Respondent. The excess of actual costs over adjusted reported costs was caused by errors made in the audit reports prepared by Respondent. Second, the provider agreement executed by Respondent after it adopted the prospective method of reimbursement requires payment to Petitioner upon the receipt of properly completed claims documents. A cost report is a properly completed claims document. Respondent's claim that the prospective method of reimbursement must be used in this proceeding is inconsistent with Respondent's actions in two respects. First, Respondent executed provider agreements with B & K which authorized the use of the retrospective method of reimbursement after Respondent amended its plan and adopted the prospective method of reimbursement. Second, when Respondent adjusted B & K's rate to recoup capital expenditures, Respondent did not base the adjustment on the prior cost reporting period as is done in the prospective method of reimbursement. Rather, Respondent went back retrospectively and based the adjustment on all cost reporting periods since B & K began operation of Krestview and Towne House. Once it has been determined that Petitioner is entitled to recovery of an underpayment, the only issues to be determined are the form and amount of such recovery. The customary form of recovering an underpayment under either the retrospective or prospective method of reimbursement is an increase in the final rate. The customary form of recovering an underpayment is ineffectual whenever the provider has terminated business operations through bankruptcy or otherwise. A provider that has terminated business operations does not lose its right to recover underpayment merely because the customary form of recovering underpayment is no longer an effectual form of recovery. Such a provider remains entitled to recover an underpayment through an effectual form of payment. The most effectual form of recovering an underpayment for a provider that has terminated its business is a lump sum payment determined in a final accounting. 5.12(c) (3) Final Accounting Expenses at issue in the amount of $1,362,925 are allowable and properly included in the five cost reports reviewed and audited by Respondent. Adjustments to reported costs made in the five audit reports disallowed expenses in the aggregate amount of $1,748,636. Petitioner admitted prior to the formal hearing that disallowances by Respondent in the aggregate amount of $304,305.34 were proper. Of the remaining $1,444,330.66 to be determined at the formal hearing, Petitioner failed to present evidence with respect to $81,405.66. The remaining expenses disallowed in the audit reports are expenses at issue in this proceeding. All of the expenses at issue are allowable and properly included in the five cost reports reviewed and audited by Respondent. Allowable expenses are not reduced by any setoff claimed by Respondent. Respondent determined as a result of KAR 5/31/78 that overpayment had been made to B & K in the aggregate amount of $1,125,910. No overpayment was determined from Respondent's audit of the other cost reports. Respondent determined that the other cost reports served only to set the prospective final rate for the subsequent periods of operation. Approximately $620,724 of the alleged overpayment resulted from Respondent's determination that the interim Medicaid per diem payment rate for Krestview's first period of operation by B & K was greater than the retrospectively determined Medicaid per diem payment rate for the same period. Approximately $505,186 of the aggregate amount of overpayment resulted from Respondent's determination that inaccuracies in original cost report for 5/31/78 caused an additional overpayment in the prospective Medicaid per diem payment rate for Krestview following Krestview's first period of operation. A major portion of the aggregate amount of claimed overpayment resulted from rent payments which were disallowed by HEW on the basis of the Section 1122 issue. /61 The net amount of underpayment due from Respondent to Petitioner is $447,473.34. The net amount of underpayment has been determined by reducing the net underpayment claimed by Petitioner in the amount of $528,879 by pretermitted issues in the amount of $81,405.66. Some of the limitations applicable to the gross underpayment claimed by Petitioner may have been applicable to some or all of the pretermitted issues. The burden of proof, however, is on Petitioner to show the proportion of the limitations applicable to the pretermitted issues. Petitioner presented no evidence to show what proportion of the limitations applied to the pretermitted issues.
Conclusions Reserved Rulings 70 6.01(a) Authenticity 70 6.01(b) Hearsay 72 6.01(b) (1) Other Rulings 77 6.01(b) (2) The Public Records Exception 78 6.01(c) Unfair Surprise 78 6.01(d) Respondent Is Bound By Res Judicata 80 6.01(e) No Waiver Of Objections Not Raised In The Prehearing Stipulation 83 6.02 No Waiver Of The Claim Against Respondent 83 6.02(a) No Waiver Under Bankruptcy Law 85 6.02(b) No Waiver Under State Law 88 6.03 Petitioner Is Not Barred By Collateral Estoppel 90 6.04 Petitioner Is Not Barred By Res Judicata 91 6.05 Setoff 94 6.05(a) Right To Assert Setoff Under Bankruptcy Law . . 94 6.05(b) Right To Assert Setoff Under State Law 97 6.06 Merits Of Respondent's Setoff 98 6.07 Petitioner's Claim 100 6.07(a) Documentation 102 6.07(b) Legal Fees 105 6.07(c) Section 1122 105 6.07(d) Accrual And Payment 107 7. RECOMMENDATION 111 APPENDIX 113 Petitioner's Proposed Findings of Fact 113 Respondent's Proposed Findings of Fact 114
The Issue Whether the Certificate of Authority held by Respondent should be subject to discipline for Respondent's failure to timely return build-up funds to a licensed bail bond agent, Willie David, pursuant to the terms of Section 648.29(3), Florida Statutes (2003).
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made: Roche Surety holds a Certificate of Authority as a Florida domestic property and casualty insurer authorized to transact insurance business in the State of Florida, subject to the jurisdiction and regulation of the Department pursuant to the Florida Insurance Code. Roche Surety, Inc. ("Roche-MGA") is a managing general agent licensed by the Department. Armando Roche is an officer and director of Roche Surety and an officer and director of Roche-MGA. He is licensed by the Department as a limited surety (bail bond) agent. Willie David is licensed by the Department as a limited surety (bail bond) agent. On or about April 18, 1995, Mr. David entered into an Agency Agreement with Roche-MGA. "Build-up fund," or "BUF," accounts are held by the insurer in trust for the agent in order to protect the insurer against any liability that the agent does not directly satisfy. The insurer places a portion of the premium due to the agent on each bond into the BUF account. Should there be a forfeiture on the bond, the insurer is allowed to take that amount out of the BUF account. In this case, Roche Surety was the insurer holding Mr. David's BUF account, pursuant to his Agency Agreement with Roche-MGA. Section 648.29(3), Florida Statutes (2003), provides: Build-up funds are maintained as a trust fund created on behalf of a bail bond agent or agency, held by the insurer in a fiduciary capacity to be used to indemnify the insurer for losses and any other agreed- upon costs related to a bail bond executed by the agent. The build-up funds are the sole property of the agent or agency. Upon termination of the bail bond agency or agent's contract and discharge of open bond liabilities on the bonds written, build-up funds are due and payable to the bail bond agent or agency not later than 6 months after final discharge of the open bond liabilities. (Emphasis added) On or about June 23, 2000, the Agency Agreement between Willie David and Roche-MGA was terminated. In July 2001, Mr. David made a complaint to the Department that Roche Surety had not returned funds that it held in his BUF account, as required, pursuant to Section 648.29, Florida Statutes (2003). Mr. David did not provide the Department with documentation sufficient to demonstrate that all of his open bond liabilities had been discharged. The Department provided Mr. David with a list of what was needed to prove discharge of the liabilities. Over a period of months, Mr. David continued to submit letters to the Department. Matters between Mr. David and Roche Surety became increasingly acrimonious. Roche Surety made repeated attempts to schedule an audit of Mr. David's records. Mr. David made allegations against Roche Surety that the company's principal, Armando Roche, considered defamatory. On or about January 7, 2002, Roche Surety filed a civil complaint in the Thirteenth Judicial Circuit in and for Hillsborough County against Willie David for defamation and civil extortion. The case was styled Roche Surety, Inc. v. Willie David, Case No. 02000151. Mr. David ultimately submitted information sufficient to satisfy the Department that all of his outstanding bond liabilities had been discharged as of August 23, 2002. Thus, the Department's position was that Roche Surety should have returned the BUF account funds to Mr. David on or before February 23, 2003. The Department sent Roche Surety a letter, dated March 3, 2003, advising Roche Surety that all of Mr. David's outstanding liabilities had been discharged as of August 23, 2002, and placing Roche Surety on notice that it was required to return the funds held in the BUF account, pursuant to Section 648.29(3), Florida Statutes (2003). On March 7, 2003, Roche Surety filed a motion in the circuit court case requesting "an order allowing [Roche Surety] to hold funds as security or, in the alternative, for a pre- judgment writ of attachment." The motion asserted Roche Surety's belief that Mr. David was judgment proof and that the BUF account represented the only asset available to satisfy any potential judgment in Roche Surety's favor. Roche Surety requested a court order permitting it to transfer the BUF account funds into the registry of the court or some other secure account or, in the alternative, for a pre-judgment writ of attachment of the BUF account. Paragraph 4 of Roche Surety's motion states, in full: Defendant [Willie David] has satisfied his open bond liabilities and said bonds have been discharged. As such, pursuant to Section 648.29, Florida Statutes, defendant is entitled to a return of the BUF account and defendant has made demand for its return. Also on March 7, 2003, counsel for Roche Surety wrote a letter in response to the Department's letter of March 3, 2003, attaching a copy of Roche Surety's circuit court motion. In the letter, counsel asserted, "By transferring the BUF account pursuant to Court Order, Roche Surety would fully comply with Florida law, including Section 648.29, Florida Statutes." The Department made no effort to intervene in the circuit court case. On August 15, 2003, Circuit Judge James D. Arnold entered an order granting Roche Surety's motion, allowing Roche Surety "to hold the proceeds of defendant's BUF Account in the same account as it now exists until this matter is resolved or until further Order of Court." The judge's order noted that Mr. David did not object to entry of an order "based on the facts stated in plaintiff's Motion and the facts stated in defendant's response to the Motion." Among the facts recited in Roche Surety's motion and repeated in the judge's order, was the statement that Mr. David had satisfied his open bond liabilities and was entitled to return of the BUF account. At the hearing in the instant case, Roche Surety offered testimony and some documentation to demonstrate that Mr. David has, in fact, not satisfied all of his open bond liabilities. This evidence directly contradicted Roche Surety's representation to the circuit court that Mr. David had satisfied all open bond liabilities. In particular, Roche Surety offered testimony that Mr. David had taken cash collateral upon the issuance of several bonds and had failed to document or account for that collateral in such a way as to assure Roche Surety that it had been returned. At most, the evidence established that Roche Surety had suspicions regarding Mr. David's handling of collateral, but no actual proof that he had not returned collateral to any of his clients. Roche Surety also offered testimony that Mr. David has not returned, provided proof of discharge, resolved, or otherwise accounted for two outstanding powers of attorney. Evidence presented by the Department demonstrated that Mr. David had reported the two powers of attorney as lost and, pursuant to the Agency Agreement, had paid the premiums on them. No evidence was presented that the powers of attorney were ever used to write bail bonds. Roche Surety's initial representation to the circuit court that Mr. David had satisfied all open bond liabilities is supported by the facts, as well as by the equitable consideration that Roche Surety should not benefit by taking diametrically opposed positions before different tribunals. The evidence established that the amount of money held in the BUF account is $30,792.08, plus any interest that has accrued since December 2002, the date of the last statement presented at hearing.
Recommendation Based on all the evidence of record, it is RECOMMENDED that the Department of Financial Services enter a final order holding that the evidence is not clear and convincing that Roche Surety has willfully violated Section 648.29, Florida Statutes (2003), and that the First Amended Notice and Order to Show Cause be dismissed. DONE AND ENTERED this 28th day of January, 2004, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 2004. COPIES FURNISHED: Douglas S. Gregory, Esquire Preston & Cowan, LLP 100 North Tampa Street, Suite 1975 Tampa, Florida 33602 Richard J. Santurri, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact Respondent Farrington holds a registered general contractor's license. He has worked in the construction business in and around Pensacola, Florida, for the last ten or fifteen years at least. On April 25, 1975, respondent caused to be filed in the United States District Court for the Northern District of Florida an original petition under Chapter XI of the Bankruptcy Act, on behalf of Rotunda Construction Company, Inc. (Rotunda). Both at the time of the filing of the petition and at the time of the final hearing, respondent served as Rotunda's president and as its qualifying licensee. Respondent is also a principal stockholder in the corporation. There has been no adjudication of bankruptcy in the course of the Chapter XI proceedings. No receiver has been appointed, nor have Rotunda's creditors sought the appointment of a receiver. There has been no composition of creditors. Rotunda was in the business of building single family dwellings, using borrowed money which it repaid after the houses were finished and sold. In 1974, Rotunda had 20 to 30 houses under construction for which Commonwealth Corporation (Commonwealth) a mortgage broker, had agreed to supply financing. In June of 1974, however, Commonwealth experienced financial difficulties, initiated proceedings under the Bankruptcy Act, and stopped furnishing Rotunda the construction money it had contracted for. Without the money Commonwealth had promised, Rotunda was unable to meet all its obligations as they came due. (A dozen or so other contracting companies also had serious financial problems in the wake of Commonwealth's collapse.) When several major creditors threatened foreclosure suits, Rotunda filed a petition pursuant to Chapter XI of the Bankruptcy Act. At the time Rotunda initiated Chapter XI proceedings, the Citizens and Peoples National Bank was a principal creditor. The bank has since been satisfied and, in the opinion of Eric Jay Nicholson, who works for the Citizens and Peoples National Bank, respondent now enjoys a "very good" reputation for financial responsibility. John Scott Carr, a mortgage banker in the employ of Southern American Mortgage Co., has known respondent for eight years and has overseen the loan of more than $2,000,000.00 to respondent or to companies he controlled. According to Mr. Carr, respondent is among the "top one or two contractors in the area." Wayne Walden, formerly associated with the First Federal Savings and Loan Association of Santa Rosa County, testified that respondent is "very responsible financially." Respondent has a very good reputation among lenders, and has demonstrated outstanding financial responsibility. He is presently actively engaged in the contracting business. Since the filing of the petition, Southern American Mortgage Co., the First Federal Savings and Loan Association of Santa Rosa County, and Mr. Donald A. Shear, a concrete supplier, have all extended credit to respondent or corporations he controls.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That the administrative complaint be dismissed. DONE and ENTERED this 14th day of October, 1977, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Mr. Barry Sinoff, Esquire 1010 Blackstone Building Jacksonville, Florida 32202 Mr. Charles S. Liberis, Esquire and Mr. Larry G. Parks, Esquire Post Office Drawer 1832 Pensacola, Florida 32598
Findings Of Fact Respondent Leroy Ellsworth Hardman has been licensed by petitioner as a limited surety agent since 1974. In January of 1976, he opened an office in Sanford, Florida, under the name of Action Bail Bonds. By December of 1978, he had qualified with the clerks of court in Orange, Seminole and Volusia Counties, and had written bonds in all three counties. Respondent decided to open an office in Deland, in addition to his office in Sanford. He leased office space on December 1, 1978, and began renovation. He had arranged for an advertisement to appear in the yellow pages of the Deland telephone directory, effective December 18, 1978, but did not succeed in opening the Deland office until December 19, 1978. Respondent hired Barbara Linkel to be in the office weekdays until four o'clock in the afternoon. He himself visited the office daily. Respondent, who had a 24 hour answering service and wore an electronic pager, instructed Ms. Linkel to notify him if anybody wanted a bond written. Respondent had charge of his Deland office while continuing to have charge of his office in Sanford. On January 29, 1979, John Wolmac, a limited surety agent, registered at the courthouse and began working for respondent, taking charge of the Deland office. On January 31, 1979, respondent executed the first bond written at the Deland office. Respondent's exhibit No. 8. Records of all bonds written at the Deland office were kept on file there until that office closed on May 31, 1979, when the records were transferred to respondent's office in Sanford. At all pertinent times, respondent's records were complete and open to the public for inspection. At the time of the hearing, respondent still had records of every bond executed or countersigned by him.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That petitioner dismiss the administrative complaint against respondent. DONE and ENTERED this 8th day of October, 1979, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Thomas A. T. Taylor, Esquire Office of the Insurance Commissioner The Capitol Tallahassee, Florida 32301 James C. Weart, Esquire 201 West Firth Street Suite 206, Paulucci Building Sanford, Florida 32771
The Issue The issues are whether, in violation of section 648.45(3)(c), Florida Statutes, Respondent executed a bond after a judgment had been entered on a bail bond that she had executed and the judgment had remained unpaid or unsecured for at least 35 days; and, if so, what penalty should be imposed.
Findings Of Fact At all material times, Respondent has been licensed as a limited surety (bail bond) agent, holding license number A097887. She has not been previously disciplined. From March 2004 through August 2010, Respondent was appointed as a bail bond agent to represent Indiana Lumbermens Mutual Insurance Company (Lumbermens). On August 3, 2007, Respondent, as a bail bond agent, issued a bond on behalf of her principal, Lumbermens, in the amount of $75,000 for defendant Richard Benton. Almost two years later, Mr. Benton failed to appear at a mandatory court appearance on May 15, 2009, in Broward Circuit Court Case 07-13631CF10A. On May 15, 2009, a circuit judge entered an Order Estreating Bond, which ordered Lumbermens to pay $75,000 to the Broward County Clerk of Courts. On July 17, 2009, the Broward County Clerk of Courts entered a judgment in the amount of $75,000 against Lumbermens based on the Order Estreating Bond (Judgment). After "Ordered and Adjudged," the Judgment reads: "Judgment in the amount of $75,000 be and the same is hereby entered against Indiana Lumbermens Mutual Ins as surety" plus interest. On July 17, 2009, the Clerk's office served a copy of the Judgment to the bail bond agency at which Respondent worked. By Clerk's Certificate of Unsatisfied Judgment dated August 21, 2009, the Broward County Clerk of Courts certified that the $75,000 Judgment had not been satisfied as of the date of the certificate. The certificate, which, on its face, was not served on Respondent or her bail bond agency, states erroneously that the Judgment was against Lumbermens and Respondent. This flawed certificate does not establish by clear and convincing evidence that the Judgment was unpaid, nor do the confusing docket remarks that the civil action against Lumbermens was "Disposed by Other," as indicated under the column marked "Statistical Closure(s)." However, Petitioner introduced into evidence Petitioner Exhibit 7, which is another Clerk's certificate certifying that the Judgment remained unpaid as of September 28, 2017. This establishes by clear and convincing evidence that the Judgment remains outstanding. After the expiration of 35 days following the entry of the Judgment, Respondent continued to execute surety bonds as a bail bond agent for one or more surety companies. In 2015, an investigator employed by Petitioner called Respondent and informed her about the Judgment against Lumbermens. The investigator told Respondent that the Judgment was outstanding and "could affect her license."
Recommendation It is RECOMMENDED that Petitioner enter a final order finding Respondent guilty of violating section 448.44(1)(m), Florida Statutes; suspending her limited surety license for three months; and reinstating the license at the end of three months without regard to whether the Judgment remains outstanding. DONE AND ENTERED this 22nd day of November, 2017, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of November, 2017. COPIES FURNISHED: Matthew R. Daley, Esquire Department of Financial Services Office of the General Counsel 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Frank Eduardo Gil, Esquire The Law Office of Frank E. Gil, P.A. 10689 North Kendall Drive, Suite 208 Miami, Florida 33176 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
Conclusions This case came before me for the purpose of issuing a final agency order. The Administrative Law Judge, Stephen F. Dean, assigned by the Division of Administrative Hearings (DOAH) to the above-styled case, entered his Recommended Order dated June 4, 2004. In the Recommended Order, the Administrative Law Judge explained that the Division of Retirement could not process the Petitioner’s Petition for Benefits absent a judicial order issued by a court of competent jurisdiction determining heirs and a judicial order of guardianship of minor heirs. At the time the Recommended Order was issued, the Petitioner had not submitted either order to the Division of Retirement. The Administrative Law Judge recommended that the Division of Retirement allow the Petitioner to submit the required judicial orders within 45 days of the date of the order. In addition, the Administrative Law Judge recommended the Division’s dismissal of the Petition for Benefits, upon Petitioner's failure to provide the judicial orders within the 45 day time period. Prior to the Administrative Law Judge’s Recommended Order, the Petitioner submitted an Order Determining Beneficiaries to the Division of Retirement. Rather than submit the judicial orders identified by the Administrative Law Judge in response to the Recommended Order, the Petitioner filed a Notice of Exception stating that documents submitted prior to the Recommended Order fulfilled the requirements of the Recommended Order. Those documents were part of the application for benefits that the Administrative Law Judge determined are inadequate to support the Petition for Benefits. Because the exception is not responsive to the Recommended Order, it is rejected. The Division hereby adopts and incorporates by reference the Recommended Order issued by the Administrative Law Judge on June 4, 2004. A copy of that Recommended Order is attached hereto and made a part hereof as “Exhibit A.” Based upon the foregoing, it is ORDERED and DIRECTED that the application filed by Lavondra Steadman o/b/o John Steadman is rejected and the request for retirement benefits is hereby Denied. DONE and ORDERED this A k day of l , 2004, at Tallahassee, Leon County, Florida. Soult. Serra SARABETH SNUGGS ~~ State Retirement Director Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560 (850) 488-5541
The Issue Whether Petitioner's application for licensure should be denied based upon his prior disciplinary history by the Florida Bar and failure to provide proof of satisfaction of resulting cost judgments against him, as indicated in the Notice of Denial issued by Respondent on February 12, 2016.
Findings Of Fact DFS is the state agency responsible for licensing and regulation of insurance in Florida pursuant to chapter 626, Florida Statutes. On September 4, 2015, Petitioner, Jeffrey A. Norkin, applied for licensure as a life, including health and variable annuity, insurance agent. On February 12, 2016, DFS issued a Notice of Denial with respect to Petitioner's application based upon Petitioner's disciplinary history with the Florida Bar ("Bar") and his failure to pay amounts assessed in his suspension and disbarment proceedings. Petitioner's Background Petitioner graduated from the University of Miami Law School in 1992 and was admitted to the Florida Bar in 1993. Prior to attending law school, Petitioner worked for several months as a life insurance agent and for a commodities broker. Until his suspension from the practice of law on October 31, 2013, Petitioner maintained a successful general litigation practice in Broward County, Florida, handling commercial disputes and civil rights matters, including the representation of victims in police brutality cases. Petitioner's Disciplinary History as an Attorney Petitioner's 2003 Reprimand On April 20, 1999, in the case of Greenberg v. Hunter, U.S. District Court, Northern District of Florida, Case No. 4:99cv45 WS, Judge William Stafford issued a Contempt Order against Petitioner for, among other things, falsely accusing opposing counsel of improperly interrupting a deposition to coach his client. Judge Stafford noted: I have observed . . . [Petitioner] is constantly accusatory in tone and by choice of words. He has been consistently disrespectful to the court, to the lawyers, to the parties, to the witnesses. He has accused counsel of spoliation of the evidence, of illegal conduct, of unprofessional behavior, of lying. He has demeaned the justice system, law enforcement, and his own profession, and my profession. He has refused to accept the court's rulings. He has constantly argued about rulings once I've made them. . . . He has called not just one attorney incompetent, but almost every attorney that has appeared here either as a witness or as counsel of record, and even his own client's prior counsel . . . . He has berated the court. . . . The Fla. Bar v. Norkin, 132 So. 3d 77, 88 (Fla. 2013). Judge Stafford banned Petitioner from practicing in the Northern District for a year. As a result, the U.S. District Court for the Southern District of Florida instituted a disciplinary action pursuant to the Rules Governing Attorney Discipline, Local Rules for the Southern District of Florida, Rule V(B). The matter was ultimately referred to the Bar for prosecution and on September 24, 2003, the Florida Supreme Court in SC02-854,2/ in its capacity as the Bar Disciplinary Board, disciplined Petitioner for "disrespectful, accusatory, argumentative, and rude behavior," by issuing a public reprimand, entering judgment for the recovery of costs against Petitioner in the amount of $930.00, and instructed him to attend 30 hours of continuing legal education. The Fla. Bar v. Norkin, 132 So. 3rd at 87 (citing The Fla. Bar v. Norkin, 858 So. 2d 332 (Fla. 2003)(unpublished table decision). Petitioner's 2013 Suspension Petitioner represented David Beem in a commercial litigation dispute, Gary Ferguson, individually, and derivatively on behalf of Floors to Doors, Inc. v. David Beem and Floors to Doors, Inc., Circuit Court Case Number: 07-34790 CA 20, in the Circuit Court of the Eleventh Judicial Circuit in and for Miami- Dade County ("Ferguson v. Beem"), which began in 2007. The litigation was very contentious and opposing counsel representing Ferguson, Gary Brooks, initiated a grievance against Petitioner, which resulted in the Bar complaint filed against Petitioner in July 2011. On October 31, 2013, in The Florida Bar v. Norkin, supra, the Florida Supreme Court, again in its capacity as the Bar Disciplinary Board, suspended Petitioner's license to practice law for 24 months, issued him a public reprimand, placed him on probation for 18 months upon reinstatement of his license, assessed costs against him in the amount of $7,970.53, and assessed administrative fees against him in the amount of $1,250.00 for engaging in unprofessional conduct in the Ferguson v. Beem litigation. Petitioner was cited for violating the Rules Regulating the Florida Bar 4-3.5(c), 4-8.2(a), 4-8.4(a), and 4-8.4(d),3/ for disrupting several court hearings by yelling at judges and exhibiting disrespectful conduct, falsely accusing a senior judge of criminal conduct to berate him into withdrawing his request for a fee, and engaging in "relentless unethical and unprofessional" efforts to denigrate and humiliate opposing counsel. The court adopted the referee's findings of fact and recommendations as to guilt, because they were supported by competent, substantial evidence, including witness testimony, exhibits, and transcripts from the Ferguson v. Beem litigation. However, the court disapproved the referee's recommended sanction of a 90-day suspension and, instead, imposed a two-year suspension. The Court held: Competent, zealous representation is required when working on a case for a client. There are proper types of behavior and methods to utilize when aggressively representing a client. Screaming at judges and opposing counsel, and personally attacking opposing counsel by disparaging him and attempting to humiliate him, are not among the types of acceptable conduct but are entirely unacceptable. One can be professional and aggressive without being obnoxious. Attorneys should focus on the substance of their cases, treating judges and opposing counsel with civility, rather than trying to prevail by being insolent toward judges and purposefully offensive toward opposing counsel. This Court has been discussing professionalism and civility for years. We do not tolerate unprofessional and discourteous behavior. We do not take any pleasure in sanctioning Norkin, but if we are to have an honored and respected profession, we are required to hold ourselves to a higher standard. Norkin has conducted himself in a manner that is the antithesis of what this Court expects from attorneys. By his unprofessional behavior, he has denigrated lawyers in the eyes of the public. Norkin's violations of the Bar rules and unprofessional behavior merit a two-year suspension and a public reprimand. We direct Norkin to appear personally before this Court to receive the public reprimand. His unprofessional conduct is an embarrassment to all members of The Florida Bar. Id. at 93. Petitioner's conduct was considered so outrageous that the court, in footnote 5 stated, "Members of The Florida Bar, law professors, and law students should study the instant case as a glaring example of unprofessional behavior." Id. Petitioner's 2015 Disbarment The Court's opinion required Petitioner to fully comply with Rule Regulating the Florida Bar 3-5.1(h), which requires a suspended attorney to give notice of the suspension to all clients, opposing counsel or co-counsel, and all courts, tribunals, or adjudicative agencies before which the attorney is counsel of record by furnishing them with a copy of the suspension order. The rule also requires the suspended attorney, within 30 days of service of the order, to furnish Bar counsel with a sworn affidavit listing the names and addresses of all persons and entities to which notice was given. On December 31, 2013, the Bar filed a petition for contempt and order to show cause against Petitioner in case number SC13-2480 alleging that despite several notifications of his noncompliance, he had failed to submit the required affidavit to Bar counsel. On January 13, 2014, the Bar filed an amended petition also alleging that Petitioner had engaged in the practice of law after the effective date of the suspension. Petitioner admits ghostwriting numerous pleadings for Mr. Beem after his suspension, both in the Ferguson v. Beem litigation and in In Re: Gary Ferguson, Debtor, United States Bankruptcy Court Case Number 12-22368, in and for the Southern District of Florida ("Ferguson bankruptcy"). In the meantime, the Bar filed, in case number SC11- 1356, a motion for sanctions against Petitioner. The motion alleged that after having been suspended and publicly reprimanded by the Court, Petitioner sent Bar counsel three offensive and threatening e-mails evidencing "complete disregard for the contents of the Court's opinion, as well as the reprimand administered by Justice Polston." The motion also pointed out that Petitioner, through his countenance and physical conduct while the public reprimand was being administered in case number SC11-1356, showed his contempt for the court. The motion urged the court to disbar Petitioner. This motion was referred to the referee in case number SC13-2480 for a hearing and recommendation. On September 3, 2014, the referee filed a report and recommendation on the Bar's petition for contempt and the motion for sanctions. The referee found that based upon Petitioner's own response to the motion for summary judgment and testimony at the hearing, there were no genuine issues of material fact with respect to the allegations concerning Petitioner's failure to comply with Rule Regulating the Florida Bar 3-5.1(h). Similarly, based on Petitioner's response and his own testimony at the hearing, the referee found that there was no genuine issue of fact concerning whether he engaged in the practice of law after the effective date of his suspension. The referee also found that with regard to the Bar's motion for sanctions, Petitioner knowingly or through callous indifference disparaged, threatened, and humiliated Bar counsel, in violation of Rule Regulating the Florida Bar 4-8.4(d). Based on these findings, the referee recommended that Petitioner be found in contempt of the court's suspension order in SC11-1356, and that he be disbarred. The Florida Supreme Court unanimously approved the recommendation, permanently disbarred Petitioner from the practice of law, and entered a judgment against Petitioner for costs in the amount of $3,034.19. See The Fla. Bar v. Norkin, 183 So. 3rd 1018 (Fla. 2015). In support of its decision, the court reasoned: Moreover, given Norkin's continuation of his egregious behavior following his suspension and during the administration of the public reprimand, we conclude that he will not change his pattern of misconduct. Indeed, his filings in the instant case continue to demonstrate his disregard for this Court, his unrepentant attitude, and his intent to continue his defiant and contemptuous conduct that is demeaning to this Court, the Court's processes, and the profession of attorneys as a whole. Such misconduct cannot and will not be tolerated as it sullies the dignity of judicial proceedings and debases the constitutional republic we serve. We conclude that Norkin is not amenable to rehabilitation, and as argued by the Bar, is deserving of permanent disbarment. Id. at 1023. The Application On September 4, 2015, Petitioner began his application for licensure as a resident life, including variable annuity and health, insurance agent. On November 5, 2015, DFS sent Petitioner a deficiency letter asking for, among other things, proof that he "paid all outstanding monies due the Florida Bar for recovery of costs ($7,970.53) and administrative fees ($1,250.00), with reference to . . . Florida Supreme Court Case 11-1356." On November 17, 2015, DFS received a letter from Petitioner indicating that he had not paid the costs or fees assessed against him in the 2013 Action. Petitioner stated "[m]ost of them are nothing more than fabricated costs, invented, and unsupported in any way by the Florida Bar as a revenue producer and as an additional means of harassing me." This submission completed his application. Petitioner admits that to date, the assessments from the suspension and disbarment have not been paid, and he has no intention of paying them. On February 12, 2016, DFS informed Petitioner of its intent to deny his application based on the Bar proceedings against him. DFS did not interview anyone, including Petitioner, prior to denying the application. Matt Tamplin, DFS Bureau Chief of Licensing, made the decision to deny Petitioner's application for lack of fitness based on Petitioner's suspension, disbarment, and failure to pay the costs or fees the Bar assessed against him. The position for which Petitioner seeks licensure is one of public trust. Tamplin's rational for the application denial was that "Florida is a very diverse and vulnerable population" and that Petitioner's disciplinary history resulted in "very serious concerns about Mr. Norkin's failure to follow rules under a regulatory authority." Petitioner's Position Petitioner does not dispute his disciplinary record or the fact that the fees assessed are not paid. However, he takes no responsibility for his actions, which resulted in his suspension and disbarment. He claims that every negative allegation against him "has been a total lie." For example, although Petitioner admits that he yelled about Judge Stafford and his rulings in a crowded public restaurant on a lunch break during trial, he speculates that he was disciplined by the federal court for the Northern District of Florida and the Bar in 2003, because he and his client were Jewish, he was "too handsome," "too young," "too loud," or "from New York." Regarding the 2013 suspension, Petitioner contends that he did nothing wrong, he apologized to the judges when he raised his voice, and that his actions towards his opposing counsel were justified because the litigation was "destroying" his client's life. Petitioner asserts he was not fully advised of the charges against him and that he was not under an obligation to disseminate the Florida Supreme Court's order of suspension to all of his opposing counsel and judges before whom he had cases pending because "the decision did not require me to send them the outrageous, false, and defamatory decision." Petitioner fully admits ghostwriting pleadings for Mr. Beem in both the Ferguson v. Beem civil litigation and Ferguson bankruptcy proceedings after his suspension. Petitioner, who was not a party to either litigation, contends this was not the unlicensed practice of law, because he was working to protect his "vested interest" in attorney's fees earned and "to protect my client from having the court be used as a weapon to steal money from him." Petitioner argues he was "the only lawyer in the world" who would help Mr. Beem and that he was not practicing law because he was not collecting fees from Mr. Beem. Petitioner also admits "staring down" each Florida Supreme Court Justice during his public reprimand, but justifies it as his attempt to humanize himself in their eyes. He also believes it was constitutionally protected non-verbal speech and that he did not receive due process because the justices did not ask him to stop staring or recuse themselves. Petitioner explains his threatening communication to Bar counsel: And I wrote an email to my bar counsel who destroyed my life telling her that she did something, I can't remember what it was, and telling her that she was the most despicable lawyer and that's the–-and that I'm going to file a lawsuit against her and to keep an eye out for it. To date, Petitioner has not paid the assessments of the Bar and has no intention of doing so. He claims an inability to pay because of his disbarment and alleges that the imposition of the costs "along with all the other punishment was unconstitutional, and completely unjustified." Petitioner argues there is no correlation between his disciplinary history as a lawyer and his ability to sell life insurance.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that DFS enter a final order denying Petitioner’s application for licensure as a life, including variable annuity and health, insurance agent in Florida. DONE AND ENTERED this 30th day of August, 2016, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 2016.
Findings Of Fact The facts here involved are largely undisputed. Raymond Harrison is a registered general contractor who obtained his initial registration in late 1973 after passing the prescribed examination. He was an officer and part owner of WHS and WHS entered into construction contracts although not registered with the FCILB. At least one other of the three owners of WHS was also a registered general contractor. Harrison filed a voluntary petition in bankruptcy on behalf of WHS on March 7, 1975 and discharge was entered June 26, 1975. Upon receipt of the Administrative Complaint Harrison submitted a letter dated 9/30/75, which was admitted into evidence as Exhibit 3, in which he states that he first learned of the requirement for WHS to be registered in January, 1975 and thereupon submitted a request for application forms to qualify the corporation. The bankruptcy petition was filed before response was received from that inquiry. Exhibit 4, which purports to be the completed first page of an application for registration for a contractor's license, was also admitted into evidence without objection. This indicates that Harrison commenced an application for registration on 1/8/74, after he had received his registration, in which he listed WHS as the company name under which he was working. Exhibit 4 is inconsistent with Harrison's position as stated in Exhibit 3 that he first learned of the requirement to qualify the corporation in January, 1975. The former statement is believed to be correct.
